RBSG Expanding its Reach

Royal Bank of Scotland Group (RBSG), Edinburgh, Scotland, released news on two deals in the past month that will strengthen its position in both the New England and Mid-Atlantic regions. On September 30, 2002, RBSG announced that its unit, Citizens Financial Group, Providence, RI, has agreed to acquire Commonwealth Bancorp Inc, Norristown, PA. The announcement came less than a month after Citizens announced the completion of its integration of Pittsburgh, PA, based Mellon Financial Corporation's former retail franchise. By acquiring Mellon's franchise last December, Citizens immediately gained a strong footing in the Mid-Atlantic region, especially in the Philadelphia banking market, where it currently ranks 3rd in total deposits. Considered to be a very sound institution, Commonwealth operates in Philadelphia and five surrounding counties, including Berks County, which will be a new area for Citizens. The company feels that Commonwealth's network of 60 branches will solidify its standing within the Philadelphia banking market, as well as position it for more development in the Mid-Atlantic region. Citizens Bank of Pennsylvania CEO Stephen Steinour said the deal puts the company "in a position to expand and grow more quickly than originally expected."

The all-cash deal, which is subject to shareholder and regulatory approval, is valued at approximately $450 million. The companies expect the deal to close by the first quarter of next year.

Effective at the close of business October 15, 2002, Medford Savings Bank, Medford, MA, merged into Citizens Bank of Massachusetts, Boston, MA, a unit of Citizens Financial. Medford Bancorp, the parent of Medford Savings Bank, announced October 7, that its shareholders approved the company's sale. The deal, which was announced in June, was an all cash transaction worth approximately $273 million. Citizens gained possession of Medford's 19 branches, strengthening its position within the Boston banking market.

Citizens Financial CEO Lawrence K. Fish indicated that neither the Commonwealth deal nor the Medford deal would stop the company from acquiring more institutions, but, for the time being, Citizens will focus on finalizing those deals.

As of June 30, 2001, Royal Bank of Scotland Group had total deposits of $11.8 billion and ranked 3rd among all commercial banking and thrift institutions in Massachusetts. As of the same date, Medford Bancorp, had total deposits of $1.0 billion and ranked 14th. (American Banker 10/1/02; Boston Globe 10/1/02; SNL Bank , Thrift Weekly, 10/7/02, 10/14/02; Citizens Press Release, 10/15/02; Internal Notice 10/16/02)

Branch Acquisition

At the close of business October 18, 2002, The Pemigewasset National Bank of Plymouth, Plymouth, NH, purchased three branches from Fleet National Bank, Providence, RI. The branches are located in Laconia, Pittsfield, and Belmont, New Hampshire.

As of June 30, 2001, Northway Financial Inc, Berlin, NH, the parent of Pemigewasset, had total deposits of $383.1 million and ranked 10th among all commercial banking and thrift institutions in New Hampshire. As of the same date, Fleet had total deposits of $1.6 billion and ranked 4th. (Internal Notice, 10/21/02)

Branch Openings

The National Grand Bank of Marblehead, Marblehead, MA, opened a branch at 2 Humphrey Street, Marblehead, MA, on September 9. On September 23, People's Bank, Bridgeport, CT, opened a branch at 188-210 Main Street, Farmington, CT.

On September 30, Banknorth NA, Portland, ME, opened a branch at 7 New England Executive Park, Burlington, MA.

On October 1, U.S. Trust Company, Greenwich, CT, a unit of The Charles Schwab Corporation, San Francisco, CA, opened a limited service branch at 1818 Market Street, Philadelphia, PA.

The Provident Bank, Amesbury, MA, opened a branch at 66 Storey Avenue, Newburyport, MA, on October 2.

Also on October 2, United Co-operative Bank, West Springfield, MA, opened a branch at 582-530 Center Street, Ludlow, MA.

On October 7, The Bank of Southern Connecticut, New Haven, CT, opened a branch at 445 West Main Street, Branford, CT.

Fleet National Bank, Providence, RI, recently opened three branches. On September 30, it opened a branch at 300 Route 44, Raynham, MA, and a branch at 306 Turnpike-Speedway Plaza, Westborough, MA. Fleet opened a branch at 93 Brockton Avenue, Abington, MA, on October 15. (Internal Notice, 10/8/02, 10/18/02, 10/23/02, 10/24/02; CT DOB 10/4/02, 10/11/02)

Branch Closings

Asian American Bank , Trust Company, Boston, MA, closed its branch located at 15 Bow Street, Somerville, MA, on September 27.

Effective at the close of business on October 4, North American Bank , Trust Company, Waterbury, CT, closed its branch located at 200 Main Street, Southbury, CT. (Internal Notice, 10/8/02, 10/23/02)

Bank Address Changes

State Street Bank , Trust Company of New Hampshire NA, Manchester, NH, relocated from 2 Wall Street to 1000 Elm Street, 20th Floor, Manchester, NH, on September 16.

On October 12, Banknorth NA, Portland, ME, relocated its Brunswick branch from 147 Old Bath Road to 10 Tibbets Drive, Brunswick, ME. (Internal Notice, 9/30/02, 10/18/02)

Mayflower Set to Expand

Mayflower Co-operative Bank, Middleboro, MA, announced October 15, 2002, that it has entered into agreements to purchase sites in Plymouth, and Lakeville, Massachusetts, for de novo expansion. Mayflower CEO Edward Pratt commented that "although Mayflower has long maintained a market presence in both of these towns, these locations represent areas in which the bank has not heavily penetrated, and which are experiencing substantial growth of both a commercial and residential nature." The bank is scheduled to take possession of the property in the spring of 2003 and expects the new branches to be open for business in the fall of the same year.

As of June 30, 2001, Mayflower had total deposits of $139.1 million and ranked 134th among all commercial banking and thrift institutions in Massachusetts. (SNL Bank , Thrift Weekly, 10/21/02)

Brookline Bancorp to Enter Auto Financing Business

Brookline Bancorp Inc, Brookline, MA, announced October 17, 2002, that it plans to enter the indirect automobile financing business. The business "will be managed by a new senior officer who is expected to join the company shortly and whose previous experience included the management of an indirect automobile lending portfolio…for another Massachusetts bank." The thrift expects the new business to reduce earnings in 2003 and to start generating profits in the second half of 2004.

As of June 30, 2001, Brookline Bancorp had total deposits of $644.4 million and ranked 30th among all commercial banking and thrift institutions in Massachusetts. (SNL Bank , Thrift Weekly, 10/21/02)

Webster in Nonbanking Activity

On October 23, 2002, Webster Financial Corp, Waterbury, CT, announced it had acquired financial planning and investment services firm Fleming Perry , Cox Inc, Norfolk, CT. The firm offers financial planning, investment management, risk management, and tax and estate planning services to high net-worth clients. Webster stated that the firm would become part of the thrift's subsidiary Webster Financial Advisors. Webster feels the deal is "a major step…to build a financial planning-based relationship management group for Connecticut and surrounding markets."

As of June 30, 2001, Webster had total deposits of $6.9 billion and ranked 3rd among all commercial banking and thrift institutions in Connecticut. (SNL Bank , Thrift Weekly, 10/28/02)

Hawke Pushes for Corporate Reform of Banks

Appearing at the American Bankers Association annual meeting on October 7, Comptroller of the Currency John D. Hawke, Jr. urged bankers to reform their corporate structures. He indicated that many regulators are concerned that the rise of large financial conglomerates might allow the parent companies to use a subsidiary's assets to benefit other parts of the corporation. In order to avoid this, he said, bank boards must be independent, but many times "there's a gap between what the board is supposed to do and the role it actually plays." Mr. Hawke suggested that bank boards might not be fully independent because of the common practices of "replicating all or part of the holding company board at the bank, or using bank officers, who may be holding company officers, to comprise the bank board."

Mr. Hawke recommended that bankers move to set standards before policymakers create new laws. He said, "time and time again, we have seen legislative or regulatory initiatives adopted that might have been avoided or mitigated if the industry had either some credible forms of self-regulation or at least some standards of conduct expressing an industry consensus as to what is acceptable conduct." (SNL Bank , Thrift Weekly, 10/14/02; American Banker 10/8/02)

FDIC to Study the Future of Banking

Also speaking before the American Bankers Association on October 8, Federal Deposit Insurance Corporation (FDIC) Chairman Don Powell announced the agency will conduct a major study on the future of banking in America. The purpose of the study will be to analyze "the underlying trends in the economy and the industry…look at what that suggests for the future, and identify emerging policy questions likely to confront both regulators and the industry over the next decade." He pointed out that the FDIC last performed a similar study 15 years ago, and based on that study "the Corporation called for many of the legislative changes that have occurred in the intervening years."

The evolving nature of the banking industry is a major consideration of the study, as Mr. Powell told the bankers, "You cannot assume that your proprietary franchise…will last forever in its present form." He noted that the banking industry has seen dramatic changes over the past 20 years. For example, since 1980, the percentage of Americans' money held in insured depository institutions has declined from 93 percent to 45 percent, and 20 years ago there were 14,396 insured commercial banks, compared with 7,996 today. Mr. Powell also mentioned a couple of regulatory issues that have developed recently. The new opportunities that are available with the passage of the Gramm-Leach-Bliley Act will test the current management and regulatory structure. In addition, the regulatory debate over banking and commerce is a big question driving the study. Mr. Powell commented, "We have heard from very experienced and thoughtful people about the hazards of this model, but it is worth noting the FDIC has not traditionally been as opposed as some to the question of bank ownership by commercial firms." (FDIC PR-103-2002, 10/8/02)

Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.Items in Bank Notes focused on developments affecting banking structure in New England. They were condensed from daily newspapers and press releases from federal and state financial regulatory agencies. Their reproduction does not imply our endorsement of the accuracy, opinions or policies reflected in the subject matter.